Change in tax status
 12. (1) Subsections (2) and (3) apply to a municipal electricity utility if, (a) the utility ceases at any time to be exempt under subsection 149 (1) of the Federal Act in circumstances in which a deemed disposition occurs under paragraph 149 (10) (b) of the Federal Act; (b) the utility was exempt immediately before that time under subsection 57 (1) of the Corporations Tax Act or subsection 27 (2) of the Taxation Act, 2007; and (c) the utility was not exempt at that time under subsection 57 (1) of the Corporations Tax Act or subsection 27 (2) of the Taxation Act, 2007.  O. Reg. 141/09, s. 9; O. Reg. 111/16, s. 4 (1). (2) The following rules apply to a municipal electricity utility to which this section applies: 1. The utility is deemed to continue to be exempt until immediately after the deemed disposition. 2. The taxation year of the utility is deemed to end immediately before the time that the corporation ceases to be exempt from the payment of tax under subsection 149 (1) of the Federal Act. 3. Subject to paragraphs 4 and 5, the utility shall pay the amount determined under section 93 of the Act calculated by reference to the deemed disposition under paragraph 149 (10) (b) of the Federal Act. 4. The utility is not required to pay an amount under paragraph 3 in respect of a deemed disposition of shares of a subsidiary corporation, i. if the utility owns at least 90 per cent of the issued and outstanding shares of the subsidiary corporation, and ii. if the subsidiary corporation is required to pay the amount determined under section 93 of the Act calculated by reference to the deemed disposition under paragraph 149 (10) (b) of the Federal Act. 5. The utility is not required to pay the amount described in paragraph 3 if both of the following conditions are satisfied: i. The utility ceases to be exempt from the payment of tax under the Federal Act as a result of a lawful distribution to the public of shares of the utility or a related corporation pursuant to a prospectus, registration statement or similar document filed with and, if required by law, accepted for filing by a public authority in Canada under the laws of Canada or of a province.  The distribution must be the first distribution to the public of shares of the utility or related corporation. ii. With the consent of the Minister, the utility pays to the Financial Corporation an amount that, in the Minister’s opinion, reasonably approximates the additional amounts, if any, that would be payable by the utility under section 93 of the Act if the utility were required, but for this paragraph, to pay the amount described in paragraph 3. 6. An amount paid to the Financial Corporation under subparagraph 5 ii cannot be varied on objection or appeal under the Corporations Tax Act. 7. The Minister is not permitted, on a reassessment, to vary an amount paid to the Financial Corporation under subparagraph 5 ii unless, in the Minister’s opinion, the utility, a related corporation or a person acting on behalf of the utility or related corporation makes a misrepresentation to the Minister that is attributable to neglect, carelessness or wilful default or commits a fraud in giving information under the Act in respect of the determination of the amount paid to the Financial Corporation under that paragraph.  O. Reg. 141/09, s. 9. (3) For the period after December 31, 2015 and before January 1, 2025, and despite the application of paragraph 38 (a) of the Federal Act, as it applies for the purposes of determining the amount of a payment required by section 93 of the Act, a municipal electricity utility’s taxable capital gain for a taxation year from a deemed disposition of a property under paragraph 149 (10) (b) of the Federal Act, as it applies for the purposes of subsection (2), is deemed to be zero. O. Reg. 111/16, s. 4 (2); O. Reg. 514/18, s. 1; O. Reg. 448/22, s. 1.